IBM builds path to consumer electronics

Under terms of the alliance, announced late Monday, Sony and Toshiba will be able to incorporate some of IBM's chipmaking advances, such as "silicon on insulator" technology, into future processors for consumer-electronic devices. As a result, IBM's chips and intellectual property could wind up in products such as camcorders and PlayStation gaming consoles.

Toshiba, which manufactures chips on behalf of Sony, will participate by lending assistance in manufacturing and chip design. IBM expects to draw from Toshiba's experience in building system-on-chip processors, single chips that contain all of the necessary elements to run a computing device.

The alliance could help fulfill major strategic objectives for all three companies. For the past few years, IBM has been trying, with a fair amount of success, to get its chips into the consumer market. Nintendo, for instance, adopted IBM's PowerPC for the GameCube console. IBM also has shown off low-power chips for cell phones.

Because Sony is one of the world's largest buyers of processors, the new pact would place Big Blue into the vortex of the consumer-electronics market.

"We're really gunning for MIPS (a processor architecture) and leaning on Motorola," said Ron Tessitore, vice president of PowerPC networking technology at IBM.

Meanwhile, Sony and Toshiba will gain access to intellectual property and chip-manufacturing techniques they would otherwise have to develop independently and at great expense. The two companies previously collaborated on the "emotion engine," the graphics chip inside the PlayStation 2. Though the chip boosted the PlayStation 2's performance, the companies had to spend substantial amounts of money in development and manufacturing.

So far, both Sony and Toshiba license the silicon-on-insulator technique IBM developed to boost processor performance and reduce power consumption.

Advances in Cell structures
The three companies have already said they would collaborate on a future processor architecture, called Cell, that some analysts speculate will end up in the PlayStation 3. The Cell architecture is expected to be able to enhance the performance of peer-to-peer computing, and it will be based in part on the existing PowerPC architecture, analysts say.

Although he declined to discuss specifics, Bijan Davari, vice president of semiconductor development at IBM Microelectronics, said Cell chips would be "optimized for high-speed video" and other Internet requirements.

"It's a unique alliance in that it brings the most advanced technology user together with the most advanced technology manufacturer," Davari added.

Though the companies would not elaborate on whether Sony would adopt the PowerPC architecture, IBM is clearly interested in seeing its technology spread. IBM will offer higher-performance processors and be "more liberal with licensing PowerPC cores," Tessitore said.

Analysts believe that the agreement marks a change in philosophy, whereby IBM will license both its chip technology and its manufacturing capacity, allowing clients to mix and match to create custom chips. IBM licenses the technology and manufactures the chips for clients such as Apple Computer and Nintendo.

"What's very different here...is this is the first time that a (customer) is getting a chance to change the cookie dough," said Rick Doherty, director of research for the Envisioneering Group. This is "the first time anyone has been allowed to change the recipe."

It's also a crucial alliance for the three companies, eventually expanding beyond consumer electronics into high-performance embedded processors that are used in networking and communications equipment.

In these markets, Intel has aligned itself with ARM, a company that designs chips of the same name for cell phones and handhelds. Advanced Micro Devices has aligned itself with competing architecture MIPS, which it acquired by buying chipmaker Alchemy Semiconductor.

PowerPC plans
The third major embedded processor is the PowerPC, which IBM shares with Motorola. An embedded processor, defined loosely by its use, is typically found in any device that's not in a PC.

One of IBM's main avenues for expanding the PowerPC is the system-on-a-chip route. These processors are becoming more popular for use in consumer-electronics and networking equipment because they contain all of the necessary elements to run a device.

IBM's 405LP chip, for example, is a low-power processor designed to perform data encryption and speech recognition for personal digital assistants.

The design and manufacture of such a system-on-a-chip processor determines whether the chip will be suitable in performance and cost for use in consumer electronics.

Under Monday's agreement, a team of employees from IBM, Toshiba and Sony, to be located in East Fishkill, N.Y., will spend several hundred million dollars over about four years to develop new process technologies for building, on 300-millimeter or 12-inch wafers, chips with feature sizes ranging from 100 nanometers to as small as 50 nanometers.

Most chips are manufactured using 130-nanometer processes on 200-millimeter or 8-inch wafers.